Situating Social Enterprises in the Business World

“Social Enterprises: Key to Strong Local Economies”

June 22-23, 2009Astoria Plaza, 15 J Escriva Drive, Ortigas Business

District, Pasig City

Social Enterprise in the Business World

• Experiences from NGOs engaged in Social Enterprises

• Learning, Insights and Innovations from the NGO experience

• Opportunities and the Comparative Advantage of the NGOs and the Community Enterprises

Social Enterprises in the Business World

• 20% remain but do not grow or experience decline … quoted from Prof Andy Ferreria, former DEAN AIM ME

• If left on their own Only 6-10% Micro Small Entrepreneurs grow to small and medium,

• USAID study on Microfinance • Performance of MF borrowers in

NRBSL

And Yet… Social Enterprises call for doing beyond Profits

• The 3 bottomlines for Social Enterprises– Doing Well Profitability– Doing Good Income for the poor

household/ preference for the marginalized– Doing Right Contributing and Supporting

advocacies on Environment, Social Equality, Sector Development

Can this be done???

Social Enterprises Experiences

CERD, KMPFI-Balay Mindanaw, UMFI

Center for Empowerment and Resource Development Inc., CERDCERD - existing for 30 years now (VMG)• Improving “quality of life” of fishing communities

through:

* Technology enhancement and income

diversification

* Engaging in local governance

* Protection and management of the

coastal resources

* Empowering women and men fishers

Who We Are p. 2

CERD Project Areas

Mondragon, N. SamarGender –Responsive FIRMED Program

Calbayog & Almagro, Samar (Samar Sea)Gender-Responsive FIRMED Program

Hinatuan, Surigao SurGender-Responsive FIRMED Program

Socio-Economic Program

Biri N. SamarGender –Responsive FIRMED Program

Socio-Economic Program

SE program for emphasis

Annual Production

Amount Sold

CERD Hatchery 9 M pieces P0.22

Household Hatchery 1.5 M pieces P0.16 to 0.18

Semi-commercial 3 M pieces P0.16 to 0.18

Prawn HatcheryCenter for Empowerment and Resource Development

Inc., (CERD)

• Major supplier of Prawn Fry in Mindanao• Grow-Out project provides Income to HH Growers

PhP7,500/Month • Practices and Advocates environment friendly

technology– Lesser fry density/sqm – Returns Spawner to the sea after 1 or two cycles– Shows commercial players viability of environment friendly

technology

KATILINGBANONG PAMAHANDI SA KATILINGBANONG PAMAHANDI SA MINDANAW FOUNDATION INC.MINDANAW FOUNDATION INC.

The Social Enterprise Institution of Balay The Social Enterprise Institution of Balay

Mindanaw GroupMindanaw Group • Helping Build Community Sustainable Helping Build Community Sustainable

Enterprises Enterprises

• Helping Build Opportunities for Wealth Helping Build Opportunities for Wealth Creation for Local Entrepreneurs Creation for Local Entrepreneurs

• Helping Build Vibrant Local Economies Helping Build Vibrant Local Economies

• Helping Build Foundation of Sustainable Helping Build Foundation of Sustainable Peace…. Peace….

KPMFI - Manok MindanawKPMFI - Manok Mindanaw

Backyard Poultry Production ProjectBackyard Poultry Production Project

Context:Context: • Provide additional Household Provide additional Household

incomeincome• Maximizing productive local Maximizing productive local

resource (land, labor, water and resource (land, labor, water and indigenous materials)indigenous materials)

• Revolutionalizing the poultry Revolutionalizing the poultry industry through backyard poultry industry through backyard poultry projectproject

SupplieSupplier r

1960s- 1970s 1960s- 1970s

Backyard Backyard Poultry Raisers Poultry Raisers

Backyard Backyard Poultry Raisers Poultry Raisers

Backyard Backyard Poultry Raisers Poultry Raisers

Backyard Backyard Poultry Raisers Poultry Raisers

Market Market MiddlemenMiddlemen Canvasser Canvasser Consumer Consumer

SupplieSupplier r

SupplieSupplier r

In the beginning….. In the beginning…..

The Evolution of Poultry Industry in the PhilippinesThe Evolution of Poultry Industry in the Philippines

The Evolution of Poultry Industry in the Philippines : The Evolution of Poultry Industry in the Philippines : Commercial Contract GrowingCommercial Contract Growing

1980s - 1980s - presentpresent

Large Contract Large Contract Growers Growers

Supplier 2Supplier 2

IntegratorIntegrator

Large Contract Large Contract Growers Growers

Large Contract Large Contract Growers Growers

Large Contract Large Contract Growers Growers

InputsInputs-DOCDOC

- FeedsFeeds-Vaccines, Vaccines, MedicinesMedicines

OutputOutput30-35 day 30-35 day chickenchicken

Supplier 3Supplier 3

Supplier 1Supplier 1

ProcessinProcessing g

MarketingMarketing

DealerDealerss

Litson Litson ManokManok

Feed Feed MillMill

Payment

Payment

The Revolutionizing Poultry Industry through BPPPThe Revolutionizing Poultry Industry through BPPP

At 2005 - presentAt 2005 - present

Backyard Backyard Broiler Growers Broiler Growers

Supplier 2Supplier 2

IntegratorIntegrator

Backyard Backyard Broiler GrowersBroiler Growers

Backyard Backyard Broiler GrowersBroiler Growers

Backyard Backyard Broiler GrowersBroiler Growers

InputsInputs-DOC, Feeds, Vaccines DOC, Feeds, Vaccines

MedicinesMedicinesOutputOutput

30-35 day chicken30-35 day chicken

Supplier 3Supplier 3

Supplier 1Supplier 1

ProcessinProcessing g

MarketingMarketing

DealerDealerss

Litson Litson ManokManok

Feed Feed MillMill

KPMFIKPMFIFACILITATOR, ORGANIZER AND FACILITATOR, ORGANIZER AND

CONSOLIDATORCONSOLIDATOR

Payment

Backyard Broiler Balay Mindanao

• Current Capacity = 10,600 heads / day (Php 16.5M monthly turnover) Institutional tie up with Sr. Pedro Lechon Manok

• Better HH level performance vs. Industry– Lower mortality– Higher feed conversion ratio

• HH Income = Additional PhP 2,000- 6,000 per cycle (the work consume minimal time from the HH)

• Environment friendly chicken waste, Preference for small producers, working with major industry players for partnership and use of model vs large commercial growers ( 10,000 heads)

Bridging the Big

MARKET

Divide

UMFI’s Core BusinessCBEs Supermarkets

Engaging Mainstream Markets with CBE Products

CBEs

UMFIChampion Products

Supermarkets,Groceries,Retail Shops, Industrial, Institutional

END CONSUMERS

CBEsCBEs

Consolidation = Scale to cover volumeRequirement of Mainstream Markets

Product DevelopmentCommon Brand = Shared Quality

Standards, Shared Costs

UMFI’s Current Operations

• Established partnerships with 110 communities nationwide

• Distribute 8 CBE products to 300 retail outlets nationwide (SM Supermarkets, Robinson’s, 7-11, Ministops)

• PhP 132 Million worth of CBE products traded • 89% increase in Farmers gross income (rice)• 100% increase in Farm gate prices for

muscovado• Supports and promotes organic products in the

mainstream markets

Product Innovations

Learning/ Insights• Select the right chain

– Margins are good, business is growing, community has an edge

– Balance between economic vs mandate priorities– Understand the roles and functions in the chain and

start with the strategic yet doable roles and functions• Be a good chain actor first

– Learn about the industry, Benchmark against the Industry Standards be a viable and reliable player

– Enough with “inato” isolationist strategy link up, get industry experts, bring in industry people, work with the private sector

– Move along the chain as capacities increase vs total “take over” integration

• Innovate the process and the product– Incubate then commercialize

Learning/ Insights

• Use “Development’s Comparative Advantages to come up with your competitive advantages”– Access to technology turn for commercial value

• Innate capacity to work on innovations• Development Funds for pilots• “backdoor” to technical assistance (schools, foreign partners,

designers)

– Network of partners for the supply base important to attain scale

– Social Capital to access key resources , Managing the free “consultants”

– Access to “affordable” finances

Enterprise Development Value Chain Management

Research andDevelopment

Input Sourcing

Production Distribution Sales and

Marketing

Customer Service /

Market Feedback

Market

Community

Industry

Technology

Raw Materials

Production Inputs

Quality Control

Standards

Costs/Pricing

Skills/Systems/Structure

Open Channels

Logistic Support

Sell and Collect

Channel Maintenance

Feedback

Addressing the bottlenecks along the chain to attain Cost Leadership

Deliver/MdseAdvertise/ Promote

Core business, Link up and Outsource = Business is partnership

Follow through

Managing the activities along the chain to ensure Product Differentiation

Meeting the Quality Definition of the Target Market

Thank You